How Does The Automatic Stay In A Bankruptcy Work?

One of the most advantageous aspects of filing for bankruptcy is getting an automatic stay placed on your case. This protection grants a temporary stay against collection activities, giving the filer time to reestablish their financial footing while also providing a break from the collection efforts. Even though the effective system does not wipe all the debt, it does stop any attempts to collect on the obligation while the settlement agreement is still pending. Anyone who has ever struggled with debt is familiar with the mental and emotional toll that it can take. The nonstop calls, the constant stream of collection letters, and the restless nights

According to Benenati Law Firm, The person who files for bankruptcy receives the advantage of the filing date, which immediately halts any collection efforts on debts that are outstanding. This includes foreclosure proceedings. The stay applies to both Chapter 7 & Chapter 13 bankruptcies.

When Will The Automatic Stay Take Effect After It Has Been Activated?

Within the first twenty-four to forty-eight hours following the filing of your petition for bankruptcy, the court will send written notice to each of the creditors listed on the petition. When the automatic stay is activated, your creditors will no longer be allowed to begin any new collection actions against you, nor will they be able to continue any activities that they have already begun. If a creditor continues to contact you after the stay has been ordered, they are in contempt of court and could face large fines in addition to fees for legal representation. If this happens, the creditor is responsible for the fees.

Infractions that fit into this category include the repossession of your automobile during the bankruptcy process and the beginning of foreclosure proceedings on your property while the effective system is in force. Both of these scenarios are examples of infractions. Even something that seems like it wouldn’t have much of an impact, like a creditor sending a collection letter to the wrong address by accident, might have far-reaching consequences.

The following is a list of things that people who file for bankruptcy can do to make the automatic stay as effective as possible:

  • Keep Up With Your Insurance Coverage

You need to make sure that you stay up with the payments on the insurance rates for both your home and your vehicle while the settlement agreement that you have reached is still in the process of being finalised. If this is the case, you put yourself in jeopardy of having your belongings repossessed and of losing your home.

  • It’s All About The Timing

Filing for bankruptcy at the most opportune time might strengthen the effectiveness of the contract that is the basis of the dispute. For example, if a creditor plans to sue you in court, you have the right to submit a petition to the court prior to the hearing in order to prevent the procedure from going forward; you can do this right up until the very moment that it is scheduled to begin. This right extends even if the creditor has already filed the lawsuit against you.

  • Put Your Rights Under The Law To Use

In the event that one of your creditors violates the automatic stay, you have a short window of time in which to pursue legal action. Get in touch with your bankruptcy attorney as soon as possible, since he or she may have to file a formal action or complaint with the court.

If you have any questions regarding the situation at hand or are having problems meeting your financial commitments, you should get in touch with the legal firm as soon as you possibly can to arrange a session that will not cost you any money.

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